If you want to guarantee a happy, stable retirement, it’s important to start saving — and investing — now. Unfortunately, hidden fees can wreak havoc on even the smartest investment strategies. Along with consulting fees, you might find yourself dealing with fees to trade, fees to advise and even high tax fees.

Advisory Fees

Advisory fees can be some of the highest fees you’ll pay — depending on your investment. While financial advisors need to eat and pay rent just like anyone else, the rhetoric they use to express how much you’re being charged might be hard to decipher. Advisors often talk in “basis points,” which simply means “tiny fractions of a percent.” So for example, 1 percent comprises 100 basis points, and 50 basis points equal 0.5 percent.

An advisory fee of 1 percent of assets is typical, but you need to understand what 1 percent will cost you. Let’s say your portfolio is valued at $500,000. If you’re being charged a 1 percent advisory fee, you’ll have to pay $5,000 annually.

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401k Expense Ratios

401k plans are offered at many mid-to-large-sized companies, but many of the people who contribute to them don’t realize that these retirement savings plans aren’t free. Depending on the funds you select, you could be stuck with high expense ratios that will slowly chip away at your hard-earned retirement savings. And these expense ratios might not be explicitly expressed to you.

Your expense ratio might be somewhere between 0.5 percent and 2 percent, which doesn’t seem like much. But just as compound interest accumulates over time, so does a 2 percent expense ratio that’s working against you. So, when picking funds for your 401k, try to choose those with low expense ratios.

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12b-1 Fees

Here’s one of the most important things to know before investing in mutual funds: 12b-1 fees are the annual marketing or distribution fees on some mutual funds, and they’re typically included in a fund’s expense ratio. Initially, 12b-1 fees were introduced to help investors by marketing a mutual fund to yield higher assets and lower expenses. However, some experts argue that 12b-1 fees can bring down your returns instead of improving your fund’s performance.

In September 2015, the Securities and Exchange Commission filed proceedings against First Eagle Investment Management, an asset management company that allegedly used investors’ mutual fund assets improperly for payments to cover “marketing and distribution of fund shares.” According to the Wall Street Journal, “First Eagle dipped deeper into funds’ assets than allowed under a plan known as the 12b-1 plan.”

First Eagle had to pay $25 million to reimburse shareholders, plus interest and a penalty of $12.5 million, Reuters reported.

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Annuity Fees

A type of insurance that pays out a fixed sum to the holder every year, annuities can be a great product for people who want to receive a regular income stream for the rest of their lives. But, this kind of contract can come with some hidden surprises.

Some notoriously high fees include commissions by the people who sell the annuities. These charges can soar as high as 10 percent, reported CNN Money. There are also surrender charges, which are implemented if you decide to pull out money in the first few years. These fees can range from 7 percent to 20 percent in the first year.

Yearly Fees

Mutual fund fees can be broken down into ongoing yearly fees and loads, and each can seriously eat away at your returns. Ongoing expenses usually include a management fee — between 0.5 percent and 2 percent of the assets, according to Investopedia — administrative costs and the 12b-1 fee.

It’s important to note that there is no clear correlation between high expense ratios and high returns. In other words, just because your ongoing expenses are high doesn’t necessarily mean you’ll enjoy high returns. Instead, look for these top characteristics of the best mutual funds.

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Loads

Loads are typically described as front-end or back-end. A front-end load is an expense incurred at the purchase of the fund. For example, a 3 percent front-end load on a $5,000 investment means that $150 goes toward the sales fee, and $4,850 is invested.

Back-end loads are deferred sales charges, or redemption charges, that go into effect when a fund is sold before a certain time. Back-end loads tend to decrease the longer you wait to sell the fund. According to Morningstar, in the first year back-end loads start at around 5 percent to 7 percent. They go down to 0 percent in the next five to seven years.

Not all mutual funds come with these kinds of expenses. So, if possible, look for no-load funds to save.

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Taxes

As you approach retirement age, taxes will likely become one of your bigger expenses. Traditional IRAs and 401k plans can be tax-deferred, which helps maximize savings. But, when you withdraw from these accounts, you’ll have to pay taxes on the amount.

Interest earned through savings accounts is taxed at your ordinary income rate, and the income that some bonds generate might be taxable as well. Moreover, any profits from selling an investment are taxed at the capital gains rate.

Before you start putting your money in taxable accounts, such as mutual funds and bonds, it’s recommended that you maximize your 401k and IRA options, reported Forbes.

Retirement Plan Early-Withdrawal Penalties

Just because you think of yourself as retired doesn’t mean the IRS agrees for the purposes of taking money out of your qualified retirement plans, including IRA, 401k and 403b accounts. Once you’ve reached age 59 and 1/2, you can take the money out without penalty. But if you withdraw prior to then, the IRS adds an extra 10 percent tax penalty on the taxable portion of your distribution.

If an exception applies, however, you can avoid the withdrawal penalty. For 401k and 403b accounts, one exception is if you retire after turning 55. On the other hand, IRAs allow early distributions to pay for higher education costs (including for your kids) and insurance premiums while you’re unemployed.

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Trading Fees

When you buy and sell shares, the brokerage charges you a fee for each trade. For example, both Schwab and Fidelity offer $4.95 trades.

When your financial advisor engages in excess trades on your behalf to rack up commissions and fees, it’s called “churning.” This practice is illegal, and you can report it to the SEC through the online complaint form.

Penalties for Failing to Take Required Distributions

Beginning in the year that you turn 70 and 1/2, you must start taking required minimum distributions from your qualified retirement plans. You can postpone required minimum distributions from 401k and 403b plans if you’re still working, as long as you don’t own more than 5 percent of the company in question.

If you fail to take the required withdrawal, the IRS imposes a penalty equal to 50 percent of the amount you didn’t take out.

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Annuity Rollover Fees

Annuity rollover fees are a hidden cost many retirees might not notice. Not all annuities are created equal — some might be tied into mutual funds, which are tied to the sometimes-volatile stock market — and others function through an insurance brokerage, promising fixed rates and guaranteed minimums.

If you’ve decided that it’s time to jump ship from your current provider, be sure you’re following the guidelines so you don’t get slammed with hidden annuity rollover fees and other costs like higher expense ratios or administrative fees you didn’t have before.

The IRS allows for tax-free exchanges of annuity contracts as long as they fall under the same tax status — for example, a SEP or a SIMPLE plan can be rolled over into a traditional IRA because they’re both tax-deferred.

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Surrender Fees

If the IRS doesn’t hit you with extra charges for rolling over your annuity, it doesn’t mean you’re home free — companies might charge a surrender penalty if you sell or withdraw money from a variable annuity, taking a portion of your proceeds. Often, annuities are structured in a yearly format — with the surrender penalties decreasing over time.

This information is typically located in the front of your policy, so before you make a switch, be sure to consult your plan. Very few annuity providers charge no surrender fees, so you should expect to pay them and if possible, budget for them in advance.

Inactivity Fees

Beware of being nickeled and dimed by your low-cost brokerage — one of the many reasons they might not be the best option for your investments is the potential for hefty fees associated with inactivity.

If you’re not trading frequently, you might see charges for inactivity and maintenance — which could land around $50 to $200 — as well as fees to access data, trading tools and more.

401k Administrative Fees

Many employers offer a 401k matching benefit — but it might be costing you. Although the most generous companies make sure to foot the bill for the administrative fees associated with managing the retirement plans, some others decide to opt out — which leaves you as the account holder to foot the bill.

If the management fee isn’t covered, consider getting out once your company benefit match maxes out and take your hard-earned dollars elsewhere, such as an individual retirement account.

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Beneficiary Fees

This fee won’t affect you directly, but it will hit your beneficiaries hard once you’re gone.

If there are any funds leftover in your IRA after your passing, most retirees hope they could go towards helping their children or grandchildren out as a final gift — but the cash doesn’t come without a cost. When an IRA gets distributed after death the beneficiaries are often hit with a tax burden — one they are sometimes unprepared for.

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